Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Expenses

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Expenses

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Multiple Choice

Which of the following costs incurred in May should be recorded as an accrued expense at the end of the month?

Wages earned by employees in May but not yet paid by May 31

Supplies purchased and paid for in May

Utilities paid in full for May on May 25

Rent paid in advance for June

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Verified step by step guidance

Understand the concept of accrued expenses: Accrued expenses are costs that have been incurred during a specific period but have not yet been paid by the end of that period. These expenses are recorded as liabilities on the balance sheet until they are paid.

Analyze each option provided in the problem: Determine whether the cost meets the criteria for an accrued expense by checking if it was incurred during May and remains unpaid by May 31.

Option 1: Wages earned by employees in May but not yet paid by May 31. Since the wages were earned in May and remain unpaid by the end of the month, they qualify as an accrued expense and should be recorded as such.

Option 2: Supplies purchased and paid for in May. Since the payment for supplies was made in May, this does not qualify as an accrued expense because there is no outstanding liability at the end of the month.

Option 3: Utilities paid in full for May on May 25 and Option 4: Rent paid in advance for June. Both of these costs were paid during May, so they do not qualify as accrued expenses. Utilities were paid for the current month, and rent was paid in advance for a future period, which would be recorded as a prepaid expense instead.